Thank you, Mr. Speaker.
Today, we are considering amendments to House Bill 30.
Not only will we be considering the budget, but I’m sure we’ll be engaging in some interesting debate before we complete it. We all know that debate is healthy. Debate is the essence of the legislative process in our system of democratic government.
This past Sunday, the Appropriations Committee reported out House Bill 30 that represents the spending program for the Commonwealth of Virginia for the two-year period.
To say, Mr. Speaker, that this was an unusual session in crafting a budget would be a great understatement. As I indicated in my remarks to the Committee when we took the bill up, I’ve not seen anything like the budget crisis situation that we now experience. As I indicated then, this budget represents a perfect storm. Think about it. We have Gov. Kaine leaving office and Gov. McDonnell transitioning into office. We have what amounted to a $1.9 billion inherited deficit. Economic reality also dictated that if the $1.9 billion Car Tax Relief is not restored by the General Assembly then local governments will be saddling the taxpayers for all the personal property tax. Imposing such a steep financial burden on working families and anxious taxpayers already grappling with job losses and economic uncertainties makes absolutely no sense.
In my 49 years as a member of this body, I’ve not seen any budget situation as bad. I think it’s because there hasn’t been one. The nation’s economy is in the worst state it’s been in in decades. While Virginia is faring much better than most other states, the stark new economic reality is that the Commonwealth’s projected General Fund revenues for the next two years will be at the level of 2006. Please note that General Fund revenues for the next two years will be less than the level or right at the level of 2006.
While Gov. Kaine and the General Assembly worked together to balance the budget over the last two years, the fact is that almost two-thirds of the $6.3 billion spending reductions from the current budget are basically one-time actions, meaning that the budget is structurally out of balance. I’m not critical of our previous actions to balance the budget; however, I simply want to state the inevitable is now before us. We can no longer rely on easy one-time fixes for the challenges facing the Commonwealth of Virginia. Though we certainly did not seek these circumstances, we have no choice but to seize this opportunity to enact sensible, long-time, structural reforms in state spending that can make this best state in America even better.
As I look back on how we balanced the 2008-2010 budget, what stands out most is that there are approximately one-third of the budget, which would include public safety and higher education, has already seen cumulative reductions of nearly 20 percent with higher education alone being reduced by almost 30 percent. On the other hand, the two-thirds of the budget-the other two-thirds-health and human resources and public education, which everyone knows, have been largely held harmless and spared the deep reductions that other areas have had. I’d also note that these two areas of the budget have also seen the greatest spending increases since 2004. Clearly, in developing the 2010-2012 biennial budget, Mr. Speaker, economic reality dictates that we look very closely at this portion of the budget. Of course, the fundamentally important decision to restore the car tax relief made early in the session by this body on January 21 when we unanimously rejected Gov. Kaine’s proposed 17 percent increase in the state income tax.
This key vote made it very clear that our shared commitment is to approving a state budget that will hasten economic recovery without new taxes on job producing businesses. As we begin to debate today the actions of the committee, I’m sure that there will be disagreements among the members of this body. Certainly, there will be many about specific budget cuts. But, Mr. Speaker, it’s one thing to be against the questioned spending cuts; it’s another to offer alternatives, which we need to do in order to continue the fiscal stewardship that this state is famous for.
House Bill 30 represents the rising of the budget phoenix. By doing the right thing today, our budget will be structurally more balanced, so, if the economy recovers we can begin to make new investments and enjoy growing levels of opportunity and prosperity.
Specifically, the Committee, in the budget amendments, Mr. Speaker, accomplished at least five major ends:
I’m sure that everyone shares my belief that the budget before us meets all of the core services-I’m sure that not everyone agrees with that. However, I do believe that the budget today strikes a sensible balance between meeting the core commitments that we as legislators like to talk about and the burdens placed on the taxpayers of Virginia. For those who believe that a different course should have been taken, I would say that there was an opportunity to do so by voting for the tax increase back in January.
If you voted your conviction back in January, then today’s vote is not about being against education; it’s not about being against health care, but rather it’s a fulfillment of the intention that we expressed on January 21 to adopt the budget within the resources we have already agreed upon.
I am reminded of the quote, “everybody wants to go to heaven, but nobody wants to die to get there.” I guess the budget equivalent of that would be “everyone wants a balanced budget, but nobody wants to cut it.”
Frankly, Mr. Speaker, I’m very proud to deliver these amendments to the state budget. And let me say this, some of the remarks that you’ve heard today might suggest to you that actions that we have taken with regard to a number of the budget cuts, specifically, with regard to changes in the retirement funding might jeopardize Virginia as the best state in the country to draw business and bring new jobs or might somehow, someway jeopardize our reputation for being the best managed state fiscally, and the best state in which to raise a child. Let me assure this body there is no risk to losing any of those; there has been not one concern expressed by the bond rating agencies at the actions that we have taken in this budget, specifically, with regard to funding the retirement system.
Hopefully, Mr. Speaker, members of the House will agree with me that we’ve done a good job on the budget.
As my friend, Vince Callahan, a former chairman of the Committee, said, “there’s no such thing as a perfect budget. In good times, we don’t spend enough and in bad times we cut the wrong programs.”
Now, I would be remiss, if I didn’t recognize the knowledge, the tremendous work of our highly motivated, devoted professional staff on the Appropriations Committee under the direction of the director, Robert Vaughn. And all the staff members have done a fantastic job in bringing us to this hour.
Mr. Speaker, over the weekend, I, too, was doing some reading. I don’t think I read quite as fast or maybe as well as the gentleman from Henry, but I wanted to talk about a couple of items that are included in the budget.
There’s some confusion dealing with Virginia Retirement System (VRS).
There are two items in particular that I’d like to discuss—one is the five percent employee contributions and the other is the House approach to funding the rates for VRS.
First, the budget introduced by Governor Kaine included a one and two percent employee contribution by the state employees in 2011 and 2012. He also included language that would allow local governments, at their option, to require existing and future employees after July 1, 2010, to pay their five percent share.
Well, the good news is that the House took out of its budget the one and two percent employee contributions by state employees that Governor Kaine had included. The Senate has left it in. The House also clarified the language that was included in Governor Kaine’s proposal that would give options to local government to be able to charge current employees a portion (from zero to five percent) of their share of their contributions. This was a request from many local school superintendents and local government leaders, I understand. And, this option would allow them maximum flexibility in dealing with their current budget shortfalls. For example, in lieu of layoffs they could do straight salary reductions or they could require existing employees to pay a portion of their contribution.
Second, Mr. Speaker, I’ve been hearing some that we’re going to “raid,” we’re going to “borrow,” we’re going to “transfer” money from VRS to balance this budget.
The House and the Senate and the Governor all agreed, generally, to a number on reduced payments for VRS. The Senate actually included a little bit lower rate and did fund part of the unfunded liability.
What I’d like for the House to understand is that the VRS is funded two ways — benefits that we pay on behalf of the employees, that would be the rates that we would pay, and, also, from earnings. Earnings represent about 68% of the funds’ value and they increase whether we contribute or not.
Back in 2002, I’m not sure everyone in the body knows this; they all voted on the budget who were here. We actually took a holiday and did not pay the state’s employer share for our employees. Know what happened? Two years later, we were 104% funded. That shows you the power of the market.
So, what we currently are dealing with is a situation where we could have made more cuts in healthcare, more cuts in education. Instead, we decided the prudent course of action was to pay the normal rate of retirement, but to suspend 20% of the actuarial liability unfunded per the actuary.
Now, you might ask, “What does that equate to?” It equals two percent of the fund value. And, from June of last year until the end of December 2009, the fund’s value went from $42 billion to $49 billion — almost a 20% increase.
The way the actuary — yes, this is very dry and boring to some, but I wanted to be sure this is clear to all the members and those who might be watching — the way the actuary works is he takes a 30-year amortization, does a 7.5% return, and he calculates a 3% cost of living adjustment.
Well, a couple things have happened.
We had about an 18% return in calendar year 2009.
We haven’t funded a cost of living adjustment because we’ve had “negative inflation,” which I guess you’d call it. So, those two are pluses on the side of the fund itself.
And, the benefits we pay annually are about $3 billion from VRS. Earnings alone this year will exceed about $3.5 billion. Then you add the normal rate we will fund, it will be about $4.5 billion to $5 billion going into the fund to pay rates of about $3 billion. So, as you can see, even without doing the unfunded liability piece, the VRS fund itself will grow.
I will be glad to answer any question that members might have off line, but I wanted to make sure we were clear as to what we, the House, did and why we did what we did, which I think was the prudent course to take.
As a side note, there are two states that pay the employees’ share for their retirement — North Dakota and Virginia. Some of our surrounding states do not even have a cost of living adjustment for their retirees.
Finally, one thing I want to commend the Chairman of Appropriations [Delegate Putney] on — Governor Kaine’s budget also took away the match to the defined contribution, or state employee’s deferred compensation. The House budget reinserted that because we thought it was critically important for our employees, who then augment their defined benefit. And, last year, we had about 15,000 people doing that defined contribution and we have roughly 347,000 members of VRS.
I thank you very much for your time.
Thank you, Mr. Speaker.
You heard the gentleman from Fairfax talk about Pre-K. I’m sure you’ll probably hear a series of speeches dealing with K-12 and the House budget and I do want to respond to that because I do think it’s very, very important.
If you’ll recall last Thursday, during the House budget debate here on the floor actually, we had some interesting rhetoric about how this side of the aisle, basically, in the house budget, was going to dramatically cut K-12.
As a matter of fact, numbers were thrown around like 30,000 teachers losing their jobs, etc. I would like to respond to that a little bit.
And, if you go back to last Friday, right after that House budget debate, I went to my office and I saw this flyer from the Virginia Education Association (VEA) about a rally on Saturday at Capitol Square. It was interesting that the rhetoric seemed to sort of match the rhetoric on the floor.
Here’s what the flyer said:
Stand up for public education. The General Assembly is preparing to cut $1.8 billion from education funding. That means 34,000 education employees or 1 in 6 educators will lose their jobs. And, it will destroy public education as we know it.
So, over the weekend, I looked in my Sunday paper. I had my cup of coffee and my fire. And, it was interesting to see how the reporters were reporting the rally. And, sure enough, it talked about hundreds of people coming to the State Capitol to protest education cuts.
One of the quotes I thought was very interesting because it was from Rob Jones, the head of the VEA. He said, “I hope I have made clear why the House should take their budget and shove it — in a trash can.” Certainly, a very calm and rational remark.
It was perhaps only topped by this remark at the rally — another person noted that the legislature has voted to raise the speed limit to 70 mph on Interstates. He is then quoted saying, “the cost of changing all the signs should go to the students that don’t have anything to eat in the morning.”
Now, what’s curious about that statement is that we did not cut, of course, the school lunch program or the breakfast program. The charge is just outright false. I thought to myself, well, should I really say something, because frankly those numbers are so exaggerated and frankly so silly, they border on being untruthful. But, I’ve learned a lesson down here — if you don’t respond and it stays out there long enough, good people start to believe it.
So, here’s my rebuttal.
First, let’s look at the charge that 34,000 education employees, or one in six educators, will lose their jobs due to the General Assembly. Now, I’ve told you all many times that I’ve been in this public school profession for 27 years. The gentleman from Caroline has spent his entire career in public education. Coach Tata, behind me spent his entire career in public education. And, you know, there really was a secret plot for 27 years. We wanted to see how many teachers we could cut. Think about that a second. Here we are, we’ve dedicated our lives to it and we’re going to allow one out of every six teachers to be cut. Why would anyone even contemplate people like us supporting that type of cuts and rhetoric? The reality is, in K-12, we have gone beyond the Kaine budget, but very prudently. As a matter of fact, it’s not $1.8 billion; it’s around $100 million.
Frankly, K-12 does deserve the scrutiny that any other area of government does. As a matter of fact, I almost, during the budget debate when people talked about K-12, wanted to ask: “tell me exactly what Project Discovery does?” And, I guarantee, if you’re honest, probably 90 percent of the people in this Chamber have no idea what Project Discovery does. It’s something we funded every year to the tune of about $720,000, and, frankly it’s an enhanced guidance counselor program that I’ve never thought works. If you look at programs like Project Graduation, I mean, how many of you all can honestly sit down and tell me exactly what Project Graduation does? It was a Governor Warner initiative that sort of petered out; we still fund it. How about this $15.7 million a year we reimburse school systems for travel? That’s $15.7 million a year. Now, when I’m thinking of travel, I think of paying some teacher for gas to go to a conference. In reality, however, it turns out they bill us for the conference, hotels, airfare, everything they can think of. Do you think it’s responsible for us to be reimbursing $15.7 million for travel.
In Pre-K, we’ve expanded Pre-K from probably $35 million to $75 million and I would disagree with the gentleman; it’s not a core function of education and, frankly, you better be careful because every dollar you put in Pre-K is a dollar you take out of the classroom. I’d also say the studies are very, very mixed, especially when you get to that 8th grader, that 11th grader. Those results go down dramatically. As a matter of fact, a lot of the Pre-K studies basically find that if the child is truly free lunch and truly in poverty, it has some effect. Studies really don’t support much beyond that. So, I would refute that Pre-K is the be all and end all.
I’ll finish with this point: we need to have a legitimate discussion about what the level of K-12 should be. That’s legit. It’s legit to have a position that we didn’t fund it enough. However, we cannot have a rational discussion when some are throwing out silly figures like $1.8 billion; when you’re throwing out figures like 34,000 people being laid off.
We owe it to our constituents on this side of the aisle to be candid about what we did and why we did it. And, I believe everyone in this house, including those on the other side of the aisle, has a responsibility to be candid when an organization like the VEA comes out with those types of numbers and to hold them accountable.
Thank you, Mr. Speaker.
Mr. Speaker, I would like to take just a minute or two today to talk to the body about the House budget and the health care portions of it.
Being on the Appropriations Committee this year has been every bit of a real challenge. We’ve listened carefully to the citizens and advocates. We’ve attended public hearings all over the state, including a six-hour session here in Richmond the Monday before the 2010 session began. We heard eloquent testimony about the importance of the healthcare safety net, and the valuable role that home care services play for our disabled citizens.
Mr. Speaker, we then had the challenge of balancing our budget within the limitations brought on by an ongoing recession. We also had to respect the will of the citizens of Virginia who voted for a new Governor who ran on a platform of not raising taxes on the citizens of Virginia. Subsequent to that, both bodies of this Assembly have confirmed that we will continue to offer car tax relief and will not enact a general tax increase.
I’ve patiently listened to members from the other side of the aisle — folks that I respect a lot, the gentleman from Arlington, Mr. Hope, the gentleman from Fairfax, Mr. Plum — and I’ve heard them stand and lament the cuts that we’ve been required to make to accomplish a balanced budget this session.
Disappointingly, none of those speeches was accompanied by recommendations as to where we might get funds from other parts of the budget to make things balance.
Mr. Speaker, one thing I’ve learned down here is that the needs of our Commonwealth are endless, but the resources of our Commonwealth are not — they are finite. And, they are a little less this year than they have been.
What we’ve had to do this year is to make those very difficult decisions to allow us to produce a balanced budget — one that’s based on realistic revenues and not funny money.
While here, we all deal with the advocates who are so passionate about their causes. But those who elected us to come here — to balance the budget, to complete our work on time, and not to raise their taxes — don’t have so many lobbyists or folks walking the halls down here. We have to stand up for them.
Mr. Speaker, I am proud of our House Health and Human Resources budget.
We tried to treat everyone fairly.
We tried to listen to the advocates.
But, we did not accept some of the recommendations of former Governor Kaine, such as freezes to the home and community-based waivers. Those are the things that keep folks in their own home and out of state institutions.
We did not take recommendations to freeze the Family Access to Medical Insurance Security (FAMIS) program. That’s the government program for the children of low-income families. We did listen to the health care advocates and chose to lower slightly the eligibility criteria for the FAMIS program, allowing 3,306 elderly and disabled citizens access to the waiver program. And, it will allow new enrollees into the FAMIS program to get care.
In the House budget, we did restore funding for in-patient adolescent and child psychiatric beds.
We were forced to cut some funding for hospitals providers, but we were careful to protect critical access hospitals in rural areas and teaching hospitals.
We did equalize funding for worthy programs like the Children’s Health Insurance Program (CHIP) of Virginia and the Healthy Families program from the private sector.
Mr. Speaker, in the House budget we also were able to add 178 new Medicaid Waiver slots over the 2011-2012 biennium for intellectually disabled individuals who, without access to the so-called MR waiver services, would otherwise require placement in a state institution instead of being able to obtain treatment and services at home and/or in their community. This investment continues our House’s strong commitment to provide support for the most vulnerable citizens among us.
The House also has budget language that provides for restoration of cuts to the FAMIS program, should we realize additional FMAP funding. I’m sure everyone knows what FMAP is. It stands for Federal Medical Assistance Percentage. By its very nature the FMAP — which is the rate of federal match for Medicaid expenditures — is a reduction in state requirements for Medicaid.
So, FMAP is money that we get for state Medicaid expenditures. So, if Virginia receives a 60% match, instead of a 50% match, the intent is to free up state General Fund amounts for other state purposes.
In particular, I want to say a word about FMAP money and the House budget. Once again, FMAP is funding to the states that recognizes the extraordinary growth of Medicaid budgets from state to state. It’s provided to the states to help them deal with this growth.
Although there are no statutory obligations to spend every dollar of that on health care, there are statutory obligations to not reduce eligibility requirements and we will certainly honor that in the House budget. What you may not know is that 44 states have used that enhanced FMAP funding for the bottom line to help them balance their budgets.
In that regard, let me just say one thing about the other body’s budget.
I believe that the Senate budget has transferred most of the necessary cuts into the second year of the biennium and they have used the FMAP money to try to backfill that.
Mr. Speaker, that’s not a responsible action to take if you place a high priority on developing a structurally balanced budget going forward. Indeed, given this economy, that could be a recipe for disaster.
The Senate budget takes one-time funds, one-time money and uses it for operations and ongoing expenses, rather than for non-recurring expenses. The House plan does not do that.
You’ve all heard about the “cliff.” Well, the cliff in the other body’s budget is higher and steeper because of the way they treated that money.
If there are any lessons from last year’s federal stimulus money that we’ve already received, it’s that localities which used that money for one-time, non-recurring expenses have fared a lot better. And, localities that did not do that are the ones facing the big layoffs.
That’s why you see much of the FMAP in the House budget used for one-time expenses.
In summary, Mr. Speaker, I’m proud of the House health budget. I do not like all of it, but I think we’ve done our job. I also believe that the conferees will make it better and I look forward to getting the conference report back, and voting for it and getting out of here on time on March 13.
Thank you.
Ladies and Gentlemen of the House, as you know, I’m a newbie to the budget conference this year. But, one thing I do know already is that we have to figure out how many dollars we have to spend before we can actually spend those dollars.
Today, I’d like to talk about where we are relative to the revenues in the state budget.
As you know, we’ve had a challenge the last few years with whether the state revenue projections are on target and have really been accurate related to dollars coming in to the Commonwealth and making sure that we account for those in our state budget.
The last few years, unfortunately, those have not always been on target.
In Fiscal Year 2008, the final revenue projections barely met our forecast, and we ended the year only $5 million above the forecast.
Last year, even after pulling down the state revenue forecast by $821 million in the mid-2009 Session re-forecast, Governor Kaine’s forecast overestimated revenues by $299 million. Unfortunately, the Commonwealth ended the year with a substantial budget shortfall.
Thankfully, in the House, we had the foresight to insist the budget conferees set aside a state revenue reserve of $150 million, which did help the state close the books at the end of the year to offset the impact of the FY 2009 shortfall.
This year, the House incorporated Governor McDonnell’s three-year upward adjustment in the state revenue mid-session reforecast, totaling $200 million. But, the House also set aside an additional $165 million for deposit into the Commonwealth’s Revenue Stabilization (Rainy Day) Fund to help offset any potential setbacks that we may experience because of the weak economy. While all of us are pleased that the economy is showing some signs of improvement, we also know that economists believe that the economy is not recovering as quickly as we’ve seen in the past and that the recovery will probably be slow and steady, not like the robust recoveries that we’re used to seeing in past years.
Now, that’s what the House of Delegates did this year in its budget relative to revenues.
But, as Paul Harvey always used to say, “here’s the rest of the story” — regarding what our Senate colleagues have done with their budget.
Mr. Speaker, in contrast to the House, the Senate not only adopted and spent the entire $200 million recommended by Governor McDonnell, but also, in essence, revised the state revenue forecast and added an additional $247 million in revenues over the three-year period.
In particular, the Senate revisions included an amount of $69.1 million in the current year when we still trail the forecast with only four months remaining until the end of this fiscal year on June 30.
That’s concerning.
In addition to spending the $247 million in additional (or what I would consider pumped-up) revenues, the Senate eliminated $40 million that Governor Kaine had included in House Bill 30 as a deposit for the Rainy Day Fund. And, they spent that $40 million too.
In my estimation, ladies and gentlemen of the House, the House and Senate budget conferees have to deal with the revenue issue. This is the most important thing we’re going to have to do in the near term.
It’s very difficult and very troubling when we’re going into this conference with the fact that not only did the Senate build their budget on what I consider faulty and dangerous revenue assumptions, but they’ve also built a lot of the spending they’ve done in their budget on false promises, because those dollars just are not there.
What the Senate has done by spending more than every cent that we’ve tried to set aside in the past, the Senate also has raised expectations that many programs will not be cut.
The House took the more prudent course to assess our revenues, spend them accordingly and make the cuts necessary to meet our constitutional obligation of balancing our state budget.
Ladies and gentleman, I hope you will join me in thanking the members of the House Appropriations Committee on doing the prudent thing and not just trying to puff up the Commonwealth’s revenue estimates.
Thank you, Mr. Speaker.
Mr. Speaker, people often say “you should put your money where your mouth is.” Well, this body has for years placed a significant emphasis on public safety. So, today, I would like to tell you about the House Budget that you adopted last Thursday and its commitment to public safety. The amendments you adopted restored funding for Sheriffs and Commonwealth’s Attorneys, initiated State Police basic trooper schools, and maintained support for the HB 599 program.
The introduced budget submitted in December reduced funding for sheriffs by $47.1 million in FY 2011 and $59.8 million in FY 2012, equaling about a 13.4 percent biennial reduction in the level of funding previously provided to sheriffs, who, as many of you know, provide the primary law enforcement services in many communities.
Mr. Speaker, I am proud of our adopted House budget because it restores $41.2 million in funding for sheriffs in FY2011 and $40.7 million in FY 2012. These restorations mean that instead of the 13.4 percent biennial reduction proposed for sheriffs, the House budget includes only a 3.2 percent reduction.
This additional funding includes restoration of the 1-to-1,500 law enforcement ratios, the elimination of across-the-board reductions for sheriffs and regional jails, and the restoration of the retirement and group life insurance payments provided for sheriffs and regional jail personnel.
And, Mr. Speaker, in addition to the funding provided for sheriffs and regional jails, the budget you adopted also restores funding for another important component of the Commonwealth’s public safety, your Commonwealth’s attorneys, who ensure the safety of our citizens by placing criminals behind bars.
The introduced budget reduced the existing funding for Commonwealth’s attorneys by $10.9 million each year, or 16.5 percent. In contrast, the House budget restores &7.5 million in each year to our Commonwealth’s attorney’s offices. this restoration reduces the proposed 16.5 percent reduction in each year to no more than 5 precent.
Another important component to ensuring the Commonwealth’s public safety is our State Police troopers. Included among the reductions contained in the introduced budget was pushing off funding for State Police basic trooper schools, allowing only one to proceed in the current biennium.
Again, I’m proud of this House budget because, at a time when more than 300 State Police positions are vacant and more than 250 troopers could retire, this budget provides funding to ensure that new troopers will continue to respond both to the needs of our citizens and other law enforcement agencies.
Finally, Mr. Speaker, the House budget maintains funding for the HB 599 program. While you know funding for this program increases and decreases with general fund revenue growth, the House budget we adopted ensures that $150 million each year is available to support those localities with police departments. Our local police departments answer the call every day, protecting citizens and addressing emergencies.
As you can see, the body’s continuing commitment to public safety is once again affirmed in the budget we adopted last Thursday. We should all be very proud of that fact.
Thank you, Mr. Speaker.
Mr. Speaker, it’s the appropriate time to give a budget conference update. It will be fairly short; I wish it was a little bit longer.
We did get together for the first time yesterday afternoon. We had a good, frank two-hour discussion. I’m pleased to say that when we talked about priorities for both sides, the Senate mentioned tax relief and car tax relief as a priority. That was a great start.
We talked about how we were uncomfortable with having such a small reserve. We talked a little bit about how we thought the revenue estimates were too high. We had a very frank discussion that lasted about two hours.
There has been a lot of discussion about going past time for the Session. That’s one of the reasons I stood today. I want to tell the House that we’re going to make a major offer on the House side. The Conferees are getting togehter right after session. I hope that the Senate is going to stay around to give a counter offer. As a matter of fact, we’re hoping and we’re proposing that we meet this afternoon; that we meet tonight; we meet Saturday morning; Saturday afternoon; Saturday night—take a little time out for chuch—meet Sunday afternoon.
It’s just essential. There’s been a lot of talk about going overtime and that talk is dangerous, especially when you’re not meeting and you’re not trying to make things happen. Our first budget deadline is Tuesday midnight. There’s been a lot of talk —“we always miss that deadline.” That’s really inappropriate. Deadlines are set for a reason and we really need to try to do the people’s business and hit those deadlines. I can tell you from a House Budget Conferee perspective, we’re willing to stay down here and do the people’s business.
We’re hoping that if we get this process rolling, we can have you a budget by Tuesday’s deadline.
Thank you, Mr. Speaker.
Mr. Speaker, this is budget update number two.
We heard complaints at budget time last year that we need to keep everyone informed, so I took that as my job. I thought I'd tell you where we are with the budget conferece.
Let me set the stage by saying that we felt really strongly as House Conferees that we needed to deal with revenue issues first. The Senate has over $650 million in their budget in fees and revenue assumptions—things like Sunday opening of ABC stores and more ABC stores. They come up with a lot more revenue than we do. To be frank, it's a lot easier to fund things like K-12 education, health care, and Sheriffs if you have a structurally unbalanced budget that has $650 million in revenue that you can't account for. We said that had to be the biggest issue going forward.
I stood on this floor on Friday and told you the House was about to make a significant offer. If you read Saturday's RTD, it says, "House makes high dollar concessions." Let me tell you what those were.
We went to about $76 million worth of fees. Fees we thought had a very tight nexus and paid for a service. This was a very big concession.
With $165 million in our budget for a revenue reserve—and anyone who's been around this place for the last three years knows that probably isn't enough—we agreed to come down to $100 million on our reserve amount.
A lot of you have talked about VRS—as you know, we funded the basic rate. The Senate funded 20 percent of the unfunded liability rate. We went to their position on that particular issue.
We really felt that's the type of offer out of the box that will get this thing rolling. With a tuesday deadline to beat we were serious about that. It's Friday around one o'clock. They'll probably take two to three hours to get back to us, so we asked the Senate to do that. They said, "we think we can possibly get back to you Sunday."
How long can it take?
They just insisted and insisted and insisted that they couldn't get back until Sunday at one o'clock, so we said could you at least give us a proposal at one o'clock. They said yes.
We got here on Sunday and waited. One o'clock passed, 1:15 passed, 1:30, 1:45—they showed up at 2:22. The reason I know that, Mr Speaker, is because I won the pool—I had 2:30, someone else had 2:15.
The Senate finally showed up and we really were expecting a good faith offer.
Let me tell you what we got.
We got nothing on fees. They didn't take one fee off the table. They did say they'd be willing to negotiate a few of them.
On revenue reserve, we got absolutley nothing.
On VRS, they accepted our position. Of course, that was helpful, since it was the same as their position.
On furloughs—I think it's one of the only concessions they made—they said they would come down one day on furloughs. If you'll recall, they had one day in 2010, three days in 2011 and three days in 2012. They would come down one day.
Let me just briefly sidetrack on furloughs because I don't think we've talked about that. We've said from the beginning at the House Appropriations Committee that's just bad policy. Let me tell you why—because any agency that goes 24/7 has to pay overtime to make up for those furloughs. For example, mental health agencies that have their training centers—we calculated that they'd have to pay $340,000 each day in overtime wages to make up for the furlough. Remember that some of those positions are fedral positions. The federal government's not happy when you're furloughing employees they're paying for.
On colleges, how do you furlough professors that are teaching? How do you furlough food service workers? Not eat one day? If you think about tuition going up, I'm not real happy if my kid's not getting fed or the professors are not showing up to class one day.
We though that was not much of an offer. We responded. By the way, we responded at five o'clock, so it took us about two and one half hours to respond.
We came back and told the Senate that we'd made a serious offer the first time. We simply weren't going to go any further on fees, etc. We did make some offers as far as K-12 education (they actually took our school bus replacement and eminent scholars proposals). Then the Senate came back once again with a very, very mediocre offer.
The reason why I try to bring you up to date on all that is because we're really at the point now that the House feels very strongly that we made a very genuine offer and we basically got nothing back from the Senate.
Not one fee. If you want to breifly address their fees, I think they're interesting. One of their fees—we talked about this in the House—is property and casuatly insurance to the tune of about $66 million. Only one problmem with that fee, the Senate bill they put in didn't get out of committee. But they still want to include in their budget.
Another fee is E-911. A lot of you have heard about that. There have been some commericals run about that. That failed in House Appropriations.
Then there's the famous civil court fee bills, which raises about $101 million. That bill, if we allowed that thing to go through would change General District Court from $27 to $75 to file. I asked my good friend the lawyer from Portsmouth, Mr. Joannu, "do you pay any local fees in portsmouth?" And he gave me a 30-minute answer about all the fees they pay. I boiled it down and it's about $41 in local fees. And then he told me about garnishments and interrogatories and all these facny legal terms—you're now going to have to pay, in Portsmouth, something on the order of $120 to go to court. If you're a small business and you're trying to colleget a bill for $40 or $50, why would you ever go to court again?
If you look at the fees they're charging for Circuit Court, they double and triple.
So here's where we are, Mr. Speaker, the bottom line is that we mad a very, very good offer and we're not going to negotiate against oursleves. Let me be clear about this—the ball is now in the Senate court. I hope they'll respond with something serious this afternoon.
Thank you, Mr. Speaker.